- The maximum Part D deductible increased slightly in 2019.
- The ‘donut hole’ has been eliminated for brand-name drugs as of 2019.
Q: How will my Medicare prescription drug costs in 2019 compare with 2018?
A: The Part D prescription drug deductible was a maximum of $405 in 2018, and that increased slightly to $415 in 2019. Some plans have deductibles well under these amounts, but no plans can have deductibles that exceed $415 in 2019. After you pay your deductible, you pay copays (a fixed amount) or coinsurance (a percentage of the cost) for your medications until the total you and the plan have spent hits the lower threshold of the donut hole.
Due to changes adopted in the federal Affordable Care Act, Medicare’s Part D prescription drug coverage gap (i.e., the “donut hole”) is gradually closing. And due to the Bipartisan Budget Act of 2018, it closed a year ahead of schedule for brand-name drugs. There is no longer a donut hole for brand-name drugs in 2019, although the donut hole for generic drugs won’t be eliminated until 2020.
In 2018, the coverage gap started when an individual and the drug plan they were enrolled in hade spent a total of $3,750 on medications. For 2019, the coverage gap starts when total spending has reached $3,820, although there is only a “gap” for generic drugs in 2019, thanks to the Bipartisan Budget Act of 2018 (in other words, brand-name drug coverage on standard Part D plans no longer changes to a higher out-of-pocket cost when total spending hits the $3,820 mark) .
Prior to 2010, Medicare Part D beneficiaries were on the hook for the full cost of their prescriptions while in the donut hole. But thanks to the Affordable Care Act, the percentage of drug costs that the patient pays while in the donut hole has been steadily declining over the last several years. In 2018, seniors only paid 35 percent of the cost of their brand-name drugs and 44 percent for generics while in the donut hole.
For 2019, the percentage of the cost of prescriptions that enrollees pay while in the donut hole decreased again (although the upper and lower thresholds for the donut hole increased, as they do each year). You’ll pay 37 percent of the cost of generic drugs, and due to the Bipartisan Budget Act of 2018, only 25 percent of the cost of brand-name drugs while in the donut hole in 2019 (instead of the originally scheduled 30 percent), which is the same amount that people pay for brand-name drugs on standard-design Part D plans before the donut hole is reached. In other words, there is no longer a donut hole for brand-name drugs in 2019.
Once you and your drug plan have spent $5,100 in out-of-pocket drug costs for 2019 (up from $5,000 in 2018), you leave the donut hole and become eligible for catastrophic coverage. Starting at that point and for the remainder of the year, you pay either 5 percent of the cost of each drug or a small copay, whichever is greater. The copays for prescriptions in the catastrophic coverage level are set by CMS each year; in 2019, they are $3.40 for generics and $8.50 for brand names.
It’s important to remember that many seniors do not reach the donut hole in a given year, because their drug costs aren’t high enough. For those individuals, the deductible and the copay or coinsurance below the donut hole will be the most important factor in determining how much they spend on medications.
Since it’s common for Part D plans to have 25 percent coinsurance on medications before the donut hole (and after the deductible), some seniors may find that their costs go up from one year to the next, simply due to the rising prices for prescription drugs. If you’re paying 25 percent of the cost and the cost goes up, your portion goes up as well. According to a Wall Street Journal analysis, the median out-of-pocket cost for a medication purchased via Medicare Part D was $117 in 2015, up from $79 in 2011.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.